The Philadelphia metro still has a blazing amount of warehouse construction, leading the region in new builds, according to a second-quarter report from Savills. But all that new construction will be delivering into a market characterized by “weak tenant demand” and rising vacancy.
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Northeast Pennsylvania had the most space under construction at 5.9M SF, followed by the central part of Pennsylvania, which had 4.5M SF underway, according to the report.
The northeastern region snagged rent growth of 2.1%, increasing to an average of $6.93 per SF. However, rent growth was flat for Lehigh Valley at $10.13 per SF.
Northeastern Pennsylvania vacancy rose 30 basis points over the second quarter to 7.5%. Lehigh Valley’s vacancy rate rose 10 bps to 7.3%.
Kane Warehouse signed the largest lease agreement over the second quarter, taking 1M SF at 71 Mall Road.
DEVELOPMENT
Demolition has been completed to prepare for the development of a hotel at 122 S. 11th St. in Center City, according to Philadelphia YIMBY. A permit filed with the city outlines 51K SF of total construction on the site of the former Midtown Diner II and some apartment buildings.
Sansom Realty Holdings purchased the site for $3.9M in 2016. Plans indicate the hotel will have 14 stories and 86 rooms. Midwest Construction and Painting is listed as the contractor.
THIS AND THAT
The owner of the Reading Viaduct wants the city of Philadelphia to pay $50M to buy the train trestle that would be encompassed by the city's planned Rail Park extension project, WHYY reports.
Owner Reading International is reluctant to give up the spot after conducting its own research, a major change from 1999 when it tried to pay the city $3M to take it off its hands in exchange for forgiving the company's environmental remediation liability.
“While a connecting public park pedestrian way would likely be an important component of the development of the Reading Viaduct, we are in the process of determining the highest and best use, which may include a mixed-use development featuring residential, retail and entertainment uses,” the company said in a statement.
The city could condemn the property and take ownership, but city officials said they were still open to negotiations for now.
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The NAIOP-Drexel Summer Program is set to kick off July 14 and run through July 23, according to a release.
The program is open to rising high school juniors and seniors and was designed to introduce people from underrepresented populations to commercial real estate careers, including architecture, engineering, construction, brokerage, development and finance.
The experiences are hosted by Drexel University and sponsored by NAIOP Greater Philadelphia and corporations invested in creating a more diverse CRE pipeline.
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